[marissaann]

hi, I have two questions if someone wouldn't mind helping me with! Thanks

Question 1: The contribution margin ratio is 30% for the Honeyville Company and the break-even point in sales is $150,000. If the company's target net operating income is $60,000, sales would have to be:


Question 2: Korn Company sells two products, as follows:
Selling Price Per Unit Variable Expense per unit
Product Y $120 $70
Product Z 500 200

Fixed Expenses total $300,000 annually. The expected sales mix in units is 60% for product Y and 40% for product Z. How much is Korn's expected break-even sales in dollars?

[terryhong92]

1) Fixed cost is 150,000 (refer to the Break-Even Point)
the Cm has to be 210,000 to get the Net incom of 60,000 (150,000+60,000)
Sales = 210,000/0.3
= 700,000
Rate
Total Sales 700,000 100%
V 490,000 70%
CM 210,000 30%
Fixed Cost 150,000
Net income 60,000

2) Use Basket to do, a basket contain 60%of Y and 40%of Z, so 6Y and 4Z in a basket.
the total CM in a basket = 6(50)+4(300)= $1500
so units sold in basket would be 300,000/150,000=200 baskets
eachbaskt contain 6Y and 4Z,
so Y is 1200 and Z is 800

Y Z
revenue 144,000 400,000
Variable 84,000 160,000
CM 60,000 240,000
Total CM 300,000
Fixed Expense 300,000
Net income 0